Will This Telecom Disappoint Again?

CenturyLink attacks the communications market from an unusual angle.

CenturyLink(NYSE: CTL) should be a household name. It's the third-largest telecom in America after AT&T(NYSE: T) and Verizon(NYSE: VZ), listed on the Fortune 500 and S&P 500, and sells hardwired communications services from coast to coast. CenturyLink's 7.5% dividend even puts the hefty 5.4% and 5% payouts from Ma Bell and Big Red to shame.

The company gets a turn in the spotlight this week, as its first-quarter results hit the news wires after Wednesday's market close. Let's get to know the star a little bit better.

Analysts see earnings falling 26% year over year to $0.58 per share. Sales are moving in the opposite direction: Wall Street expects 3% revenue growth to roughly $4.6 billion. These estimates have been pretty stable since CenturyLink's last report.

The revenue target agrees with CenturyLink's own projections, but Wall Street's earnings estimates fall at the lower end of the official guidance range. The analyst skepticism makes sense in a historical context: CenturyLink has missed the Street's earnings targets in three of the past five quarters while beating expectations only once.

Unlike Verizon and AT&T, CenturyLink doesn't run a wireless network. The company does resell Verizon's call phone service but prefers to sell high-speed Internet and fiber-based TV services. COO Karen Puckett recently underscored that wireless isn't a core service to CenturyLink: "Wireless is important, but I don't feel we have the need to be a facility-based wireless provider," she said at a Morgan Stanley conference in March. "We would prioritize broadband and video over wireless any day. If you talked to a general manager and gave them the choice, they would say, 'Give me IPTV before you give me wireless.'"

The company recently regrouped its operations, boiling five divisions down to three. That change should not affect the first-quarter report, as it took effect on the first day of the second quarter, but do look out for a discussion of how the reorganization reduces costs and creates new cross-selling opportunities.